USPS to Default on $11 Billion in Payments
Thursday, 19 Jul 2012 08:47 AM
The U.S. Postal Service (USPS) will default on a $5.5 billion payment which would fund health benefits for its future retirees on August 1, and on a slightly larger payment due in September unless Congress acts within days.
It will be the first time the financially strapped agency has missed the payments — but the House of Representatives is showing no signs that it is willing to help out.
“We are simply not capable of making either of these payments to the U.S. Treasury, in part or in full, while continuing to meet our other legal obligations, including our obligation to provide universal service to the American people,” USPS spokesman, Dave Partenheimer told the New York Times.
The Postal Service is in dire shape as email and private carriers — such as FedEx and UPS — have eaten into its services over the years. It is already considering scrapping Saturday services.
And the impossibility of making more than $11 billion in payments — the first due on Aug. 1 — shows just how far its finances have fallen.
The Democrat-controlled Senate voted in April to spread out its healthcare payments over 40 years and return $11 billion it overpaid to a pension fund, however the House has refused to take up the issue.
Sen. Scott Brown of Massachusetts criticized his Republican colleagues in the House, saying, “The longer the House delays consideration of the bill, the longer the uncertainty about the Postal Service’s financial future remains. This is irresponsible and unfair.”
But many House Republicans are opposed to a government bailout and leadership has not scheduled a vote on a bill, which like the Senate’s version would prevent Post Office closures.
Unions representing postal workers say Congress is at fault.
“This is an artificial crisis created by the Congressional mandate that the USPS, alone among all agencies or companies, pre-fund its future retiree health benefits for the next 75 years,” Fredric Rolando, president of the National Association of Letter Carriers told the Times.
“This unaffordable burden accounts for 85 percent of all the Postal Service’s red ink. If lawmakers fix the problem they created, the sharp cuts in service they want to impose on Americans and small businesses would not be necessary.”
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